Australian Broker Call

Morgan Stanley rates 360 as Overweight (1) -

Life360 is one of the stocks where Morgan Stanley came away more bullish than consensus following the August reporting season.

The broker points out FY23 guidance is based on pricing prior to the recent increase for plans to new subscribers by up to 50%. It's also felt the current share price doesn't incorporate the rebound in Tile retail hardware sales for FY22 and beyond.

The Overweight rating and $6.80 target are retained. Industry View: In-Line.

Target price is $6.80 Current Price is $5.60 Difference: $1.2
If 360 meets the Morgan Stanley target it will return approximately 21% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates APA as No Rating (-1) -

Macquarie lowers its APA Group earnings (EBITDA) forecasts for FY23-25 by -4.2%, -3.1% and -0.8%, respectively, to reflect slightly lower earnings and higher depreciation from the Victorian Transmission System (VTS).

The group's upcoming VTS proposal should benefit from the recent rally in bond prices, offset by higher inflation which favours regulated asset base (RAB) growth.

Macquarie is currently on research restriction.

Current Price is $10.80. Target price not assessed.

Current consensus price target is $10.85, suggesting downside of -0.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Credit Suisse rates APM as Outperform (1) -

In response to media reports APM Human Services International is looking to acquire unlisted competitor Angus Knight for $30m (APM has not commented on the report), Credit Suisse responds with: the target would make a clear fit.

The broker believes APM can fund this size of acquisition through debt, while highlighting the company has access to $409m in liquidity.

Outperform. Target is unchanged at $4.25.

Target price is $4.25 Current Price is $3.22 Difference: $1.03
If APM meets the Credit Suisse target it will return approximately 32% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates APX as Sell (5) -

Citi sees some improvement in August website traffic to Appen's two largest customers (Google and Facebook) though retains its Sell rating and $3.95 target price.

The broker also notes China continues to see strong growth, with a record for web traffic in August.

Target price is $3.95 Current Price is $3.76 Difference: $0.19
If APX meets the Citi target it will return approximately 5% (excluding dividends, fees and charges).

Current consensus price target is $3.42, suggesting downside of -10.3% (ex-dividends)

Forecast for FY22:

Forecast for FY23:

Market Sentiment: -1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates ASX as Outperform (1) -

Macquarie suggests recent management changes may present an opportunity for the ASX to adopt a new optimal capital structure.

Introducing debt would be marginally EPS accretive at the current share price, according to the broker, assuming a 5% interest rate.

If interest rates were under 5.3% (or the share price below $79) there would still be EPS accretion though also an increased risk profile, explains the analyst.

Macquarie retains its Outperform rating and $93 target. 

Target price is $93.00 Current Price is $75.31 Difference: $17.69
If ASX meets the Macquarie target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $80.93, suggesting upside of 7.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates BSL as Buy (1) -

Amidst a general summing up of current market dynamics and indicators, Ord Minnett explains its Buy rating is in place because BlueScope Steel's share price looks "cheap".

Offsetting is the observation that global demand and production of steel have declined recently.

Ord Minnett doesn't see any near-term catalysts for the stock to re-rate. Target $22 (unchanged).

Target price is $22.00 Current Price is $17.07 Difference: $4.93
If BSL meets the Ord Minnett target it will return approximately 29% (excluding dividends, fees and charges).

Current consensus price target is $20.99, suggesting upside of 23.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates FBU as Outperform (1) -

Improved domestic competitor behaviour/pricing and benefits from Fletcher Building's waste-tyre project underpin Macquarie's increased Concrete margin forecast. Cement's thermal coal hedges are also expected to deliver short-term benefits.

The forecast margin rises to the middle of 15.5-16.5% medium-term guidance range, and the broker lifts its FY23-25 EPS forecasts by 1%, 3% and 3%, respectively.

The Outperform rating is retained and the target price increases to NZ$8.20 from NZ$7.96.

Current Price is $5.00. Target price not assessed.

Current consensus price target is $7.00, suggesting upside of 38.3% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates JHX as Buy (1) -

No new outlook commentary was provided on day one of James Hardie Industries investor day, though Citi notes FY23 guidance was retained, and the company is "sold out" across most of its products.

The broker feels the company will now focus on short-term volume and market share to try and counter a softer market, even though management expects pricing to hold up better than previously thought.

The Buy rating and $41.90 target are unchanged.

Target price is $41.90 Current Price is $34.72 Difference: $7.18
If JHX meets the Citi target it will return approximately 21% (excluding dividends, fees and charges).

Current consensus price target is $48.57, suggesting upside of 37.5% (ex-dividends)

The company's fiscal year ends in February.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Morgan Stanley rates LLC as Equal-weight (3) -

Morgan Stanley re-evaluates the outlook for Lendlease Group and decides to lower its FY24 and FY25 EPS estimates to align with the lower end of the group's 8-11% target for return on equity (ROE).

While current multiples suggest a low valuation, gearing is expected to rise to around 19% by FY26 from 7% currently. Potentially the group could undertake asset sales (Communities segment most likely) though no process is currently underway.

The analyst forecasts positive cash flows may elude the group for at least another three years. The Equal-weight rating and $11.20 target are retained.

Target price is $11.20 Current Price is $10.37 Difference: $0.83
If LLC meets the Morgan Stanley target it will return approximately 8% (excluding dividends, fees and charges).

Current consensus price target is $12.41, suggesting upside of 19.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates LTR as Outperform (1) -

Liontown Resources has awarded its power supply contract to the Australian independent power producer Zenith Energy for
a duration of 15 years.

Electricity supply commences from the 1H of 2024 to coincide with the company's process plant commissioning, explains the analyst.

No changes are made to forecasts and the Outperform rating and $2.50 target are retained. The broker notes lithium prices remain buoyant and provide tailwinds for the FY25 earnings forecast.

Target price is $2.50 Current Price is $1.75 Difference: $0.75
If LTR meets the Macquarie target it will return approximately 43% (excluding dividends, fees and charges).

The company's fiscal year ends in June.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates MAF as Buy (1) -

MA Financial found itself in the middle of unexpected market speculation about the abolishment (?), potentially, of Australia’s Significant Investor Visa (SIV) program.

Ord Minnett flat out refuses to participate and awaits further, concrete developments. The broker notes the financial services provider has responded with sticking to its earnings guidance for FY22.

Ord Minnett points out its own forecast sits at the bottom of the range.

Buy rating retained. Target $10.

Target price is $10.00 Current Price is $3.99 Difference: $6.01
If MAF meets the Ord Minnett target it will return approximately 151% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates MIN as Buy (1) -

UBS believes Mineral Resources' lithium business will almost double in value if spun off and listed on the NYSE, as the board is considering. Mineral Resources would retain a controlling shareholding.

However, the broker is also of the view critical details on transaction structure, tax implications, process and timing are needed for investors to properly gauge transaction merits.

Buy and $83 target retained for now.

Target price is $83.00 Current Price is $73.08 Difference: $9.92
If MIN meets the UBS target it will return approximately 14% (excluding dividends, fees and charges).

Current consensus price target is $79.76, suggesting upside of 8.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 1.0

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Macquarie rates NIC as Neutral (3) -

Macquarie extends its long-term mine life estimate at Nickel Industries' Hengjaya mine out to 2047, following an upgrade to the mineral resource.

The latest resource includes 151Mt of limonite resource, which will enable long-term supply to indonesia Morowali Industrial Park's (IMIP) Huayue and QMB HPAL projects.

HPAL is the process used to recover nickel and cobalt separately from each other from low-grade nickel oxide laterite ores.

No changes are made to earnings forecasts and the Neutral rating and $1.00 target price are retained.

Target price is $1.00 Current Price is $0.96 Difference: $0.04
If NIC meets the Macquarie target it will return approximately 4% (excluding dividends, fees and charges).

The company's fiscal year ends in December.

Forecast for FY22:

Forecast for FY23:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.5

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Ord Minnett rates QAN as Buy (1) -

Ord Minnett reiterates its high conviction positive view on Qantas Airways, supported by a favourable industry structure locally, upside potential to forecasts and ongoing balance sheet repair.

The broker also finds the airline owns an "impressive" royalty arm, that is not appreciated by the market.

The announcement of a $400m buyback came earlier-than-expected and Ord Minnett suggests it highlights management's comfort with the airline's capital position.

Buy rating retained, while the price target rises to $7.40 from $7.20.

Target price is $7.40 Current Price is $5.28 Difference: $2.12
If QAN meets the Ord Minnett target it will return approximately 40% (excluding dividends, fees and charges).

Current consensus price target is $6.37, suggesting upside of 20.0% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.7

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates S32 as Downgrade to Neutral from Buy (3) -

Following an around 10% outperformance versus the ASX300 Mining Index in the last month (despite lower copper and aluminium prices), Citi downgrades its rating for South32 to Neutral from Buy. 

While robust valuation support exists, there's thought to be significant downside risk to near-term earnings, based upon spot commodity prices compared to the broker's base case.

The target price falls to $4.50 from $4.65 after downward revisions to the analyst's FY23 and FY24 earnings forecasts.

Target price is $4.50 Current Price is $4.25 Difference: $0.25
If S32 meets the Citi target it will return approximately 6% (excluding dividends, fees and charges).

Current consensus price target is $4.87, suggesting upside of 12.5% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.9

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

Citi rates SFR as Buy (1) -

Following a site visit, Citi sees potential performance upside for the Matsa copper operations in Spain, though such upside may take time to realise.

The challenge for Sandfire Resources is to understand the geological improvement in a timely and capex-disciplined manner, believes the analyst.

The Buy rating and $6.00 target price are retained.

Target price is $6.00 Current Price is $4.35 Difference: $1.65
If SFR meets the Citi target it will return approximately 38% (excluding dividends, fees and charges).

Current consensus price target is $5.36, suggesting upside of 22.2% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

This company reports in USD. All estimates have been converted into AUD by FNArena at present FX values.

Market Sentiment: 0.6

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources

UBS rates TLC as Initiation of coverage with Buy (1) -

UBS has initiated coverage of The Lottery Corp post its demerger from Tabcorp Holdings ((TAH)), describing "a unique asset, ready to re-rate", as one of the few listed lottery operators globally.

The stock offers long-dated licences, a strong domestic market position with high barriers to entry, control over key demand levers, and low capital intensity, the broker notes.

Lottery Corp is growing its online business well above the historical rate, which being to some extent covid-driven will abate in pace, UBS suggests, but penetration will remain ongoing for a digital business 3x more profitable than retail.

Initiate with Buy and a $5.40 target.

Target price is $5.40 Current Price is $4.40 Difference: $1
If TLC meets the UBS target it will return approximately 23% (excluding dividends, fees and charges).

Current consensus price target is $5.03, suggesting upside of 14.7% (ex-dividends)

The company's fiscal year ends in June.

Forecast for FY23:

Forecast for FY24:

Market Sentiment: 0.8

All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources